You are technically correct in what you say about anyone earning above the LEL having to go on payroll. Also if you go to https://www.gov.uk/register-employer it states 'You must register as an Employer even if you are only paying yourself as the Director of a limited company'.

Directors of limited companies are obliged to complete annual self assessment tax returns. The £6k annual salary has to be recorded on the tax return along with any other sources of income. This is not possible without the relevant PAYE reference numbers so I assume that it must be recorded under another heading such as Dividends. If it is recorded as a Dividend, I would be inclined to go along with it.

In summary, you need to probe further to establish a transparent audit trail.

In my understanding of this the director would be required to file a personal tax return as in self assesment. The limited company would be required to complete a corporation tax return. The director would then have to declare any wages up to the £11,500 threshold and then declare any dividends taken and this would then calculate the entire tax return and how much precentage was due as tax.

The confusion come in when it is stated that a company should be registered on a paye scheme if it has any employees.

But as I am pretty damn sure the director would need to undertake a SA this must surely cancel out paye for him and only on any staff he employs.

In my understanding of this the director would be required to file a personal tax return as in self assesment. The limited company would be required to complete a corporation tax return. The director would then have to declare any wages up to the £11,500 threshold and then declare any dividends taken and this would then calculate the entire tax return and how much precentage was due as tax.

The confusion come in when it is stated that a company should be registered on a paye scheme if it has any employees.

But as I am pretty damn sure the director would need to undertake a SA this must surely cancel out paye for him and only on any staff he employs.

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Ps this is what it says on gov.uk

Directors are classed as employees and pay National Insurance on annual income from salary and bonuses over £8,164.

Contributions are worked out from their annual earnings rather than from what they earn in each pay period.

It is my understanding (and someone can happily correct me) that there is no legal obligation for a Director to complete a self assessment return if their total income falls below £11500 - but HMRC make it very hard to discover if this is correct or not as they want them to complete one anyway - but that's the cynics view.

How it usually works is that you set up a PAYE scheme and pay a Director up to the LEL for NIC - currently £680 ish per month. This ensures they get their pension credit towards their state pension at retirement but without paying any income tax or NIC and it is also then allowable as a taxable deduction through the P&L account. If it doesn't go through a PAYE scheme it can't go through the P&L is how I was taught centuries ago. You would do this whether the company was profitable or not as in a loss situation the salary would increase losses carriedt forward into future profitable years so minimising corporation tax payable. They would then also take dividends to top up their income according to how much profit is left after corporation tax or what is in reserves from previous years. The salary and dividends have to be put onto the SA return together with any benefits in kind, pension contributions made personally, other dividend income etc etc to come up with their total taxable income